Despite the fact that there is little or no need for work in our society, each of us actually knows that were we to stop working for any considerable length of time we would starve, bills would go unpaid, and our homes and cars would be repossessed.

Although today it takes only a tiny fraction of the effort needed to produce a house originally built in 1951, we still devote 15, 20 or even thirty years of our life to repay the debt incurred in its purchase. A home built by Threecrow’s parents in California in 1951 cost $9,500, yet that same home, now 60 years old, sells today for $432,000 – 45 times its 1950s price. For the most part we take no notice of this discrepancy; we write it off to inflation or even choose to ignore it altogether – in fact, in the case of homes, the very idea that the same home should increase in price each year, although it has actually decayed by some increment in useful life, has actually been a selling point!

The home, as a useful thing required some definite amount of labor by a group of people – carpenters, electricians, plumbers, etc. We cannot measure the value created by this actual labor directly however, but only through the market price of the home. If, despite the decay of the home as a useful thing over a sixty year period, its market price should constantly increase, it is only because market prices for homes in general are increasing.

If the actual sale prices of all the homes around you tend to rise by ten percent a year, it is likely the notional price of your home will also be rising in market price by ten percent a year. Your city or town will register this rise by dutifully raising the tax on your property even though you have no intention of selling. They estimate the potential market price of your property by examining the actual sale prices of homes in your area generally.

Homes, as things of value are responsible for each other as things of value, which is to say, the price of a sixty year old home cannot be considered in isolation from the market prices of all the other homes with which it can be compared. If, therefore, the same home costs $9,500 in 1951, and $432,000 sixty years later the only explanation for this discrepancy must be found not in the home itself, but in the thing in which the price of the home is denominated, dollars.

We can do a simple thought experiment to demonstrate this: We can suppose that the original $9,500 sale price represents the monetary expression of the useful life of the home – the amount of time it can be used as a house until it must be replaced by another house. If we assume that the useful life of this home is 120 years, we also assume that each year the home declines in value by $79.17, or 120th of its purchased price. Sixty years later, the total value of the house has dropped to half the original, or $4,750. If the useful life of the home had declined by half over that sixty year period, but the price had remained the same – $9,500 – the purchasing power of its original price would have fallen by half. Before this $9,500 reflected a useful life of 120 years, now the same price only reflects the useful life of the 60 remaining years.

In the case of Threecrow’s childhood home, the price of the home has increased by 45 times over a sixty year period. If, therefore, the useful life of the house was 120 years initially, the purchasing power of the original dollar price has declined to such a point that only a price 45 times higher than the original price suffices to pay for its remaining sixty years. The only other conclusion possible is that we now expect the home to be useful for another 3500 years! We are clearly forced to conclude that a change has occurred in the purchasing power of the dollar which is driving up the prices of homes generally. The purchasing power of money has eroded over the same sixty year period but at a remarkably – even staggeringly – faster rate than the decay in the usefulness of a home built in 1951.

Economists have tracked the change in home prices for decades now, but have yet to offer any reasonable explanation for why dollar prices have escalated this way. The reason they offer no explanation is, of course, because they already know why this happens, but they, Washington, and the sociopath Children of Crassus wish to leave you in the dark about its cause.

You did it!

You drove the prices of homes to this mind-boggling level. The monetary system is designed in such a way that every time you or another working family purchases a home, you drive the prices of homes still higher. As we saw in the case of our rebellious redneck, the debt system results in the automatic escalation of the prices of everything.

Remember, when our redneck went into debt to purchase his Ford F250, he precipitated the immediate creation of new fiat money in the bank account of the dealer. This money entered the economy and existed side by side with his promise to repay recorded on the bank’s books. His debt existed in two places at the same time: as a promise, and as actual newly created money.

The case is exactly the same for our deadbeat African-American sub-prime borrower in Akron, Ohio. By signing the mortgage agreement with her bank, she triggered the immediate creation of the dollar price of the home in the account of the seller. The money did not exist before the bank created it in the seller’s account. The actual supply of money in the economy was, therefore, increased by both the creation of new money in the account of the Ford dealer, and also by the creation of new money in the account of the home seller.

This is how fiat dollars differ entirely from dollars backed by gold: had these transactions taken place before 1933, the bank would have been required to transfer a definite amount of gold from its account into the accounts of the Ford dealer and the seller of the home. The bank’s holding of gold would have declined exactly by the same amount of gold money as the dealer’s and the home seller’s holdings of gold increased. The promises to repay, made by our redneck and our deadbeat, would have appeared on the bank’s books only as a notional placeholder, it would have remained only a promise until it was repaid. In the meantime, the bank was out the gold it gave to the Ford dealer and the home seller.

The purely notional quality of the bank’s asset would have been enforced by the same rules which we mentioned above: just as the prices of homes cannot be considered in isolation from each other, so the purchasing power of an ounce of gold cannot be considered in isolation from that of all gold.

This is exactly the case for gold money. Since it only circulates to facilitate transactions, the price of the good is represented by so many ounces of gold. It does not matter whether this gold was plundered from Mesoamerica or mined in today’s democratic South Africa, each ounce of gold represents exactly the same value and exactly the same purchasing power as every other ounce of gold.

And, gold can’t be created in the accounts of the Ford dealer or the home seller by entering keystrokes on a computer. To actually deliver the purchasing power of an ounce of gold to the Ford dealer, it must be deducted from where it currently resides: in the account of the bank. If the bank should try to do what the slave-owners of the South did during the Civil War, and issue paper symbols of the gold far in excess of the real gold it owns, this would only result in the more or less rapid depreciation of this token.

Absent the actual production of more gold, the amount of gold available to circulate in the economy cannot increase. At the same time, the amount of gold in circulation cannot exceed the amount that is needed to facilitate the purchase and sale of goods taking place in the economy. When gold was the standard for the dollar, the dollar prices for all goods had to generally reflect the actual value contained in them. Gold held prices of goods in check, and the prices of goods held the amount of gold in circulation in check.

But, as we stated in another segment, the price of a good measured nothing more than the amount of time it took to produce the good in the form of gold. Gold was the physical material used by society to express the socially necessary labor time required for the production of goods. We had no way of knowing what this labor time is, and so relied on their constantly fluctuating money prices to approximate that value for us. We could then compare this money price to our own money wages.

By debasing dollars from gold, however, Washington and the children of Crassus were able to perform what Threecrow calls an ingenious sleight of hand – a cheap charlatan’s trick, a massive scam against working people – namely, by inflating the amount of worthless dollars every time you borrowed money, they could surreptitiously increase the prices of goods.

Since prices were no longer being held in check by gold, they could freely creep upward; driven only by the common business practices of offering goods for whatever price the market could bear. Since these new prices now demand an even greater supply of dollars in circulation to realize them, a ready supply of new dollars could now be made available through the credit system. And, as prices crept upward faster than your wages, your need for credit increased.

The expression of the value of a good in the physical material of so many ounces of gold only measured the labor time socially necessary for its production. The total amount of gold money spent on homes in any given year measured the amount of human effort annually required by society to satisfy their total need for new shelter, and, thus, for social labor performed in the specific fashion required to produce housing during that year. If too much labor was expended in the form of housing construction, therefore, the prices of houses sold that year would fall. If too little labor was expended in the year, the prices of housing would rise. Gold thus indirectly regulated labor after the fact, through the fluctuating movement of prices in the market for housing.

Once gold was severed from the dollar, this useful function of money was silenced. Money prices no longer approximated the value of goods, and no longer gave an indication of whether the mass of social labor time was greater than what was required by society or smaller than what was required by society. It only recorded what it was: so many dollars spent by society to purchase the goods.

To give an example of how this works: Although, as a result of an improvement in the productivity of the construction industry, our $9,500 California house required in 1952 only 98 percent of the labor time that was socially necessary in 1951, still the developer could claim with a straight face that land had now grown scarcer in the area, making all the remaining lots in his development that much dearer. He could, on this pretext, increase the price of new homes by 3 percent – from $9,500 to $9,785 – and thus pocket the entire five percent difference between the actual value of the new houses and their sale prices.

Immediately upon concluding the mortgage agreement, the bank would dutifully create this $9,785 in the account of the developer. The real estate agent, having concluded this sale between the buyer and the developer would immediately upwardly revise all the existing homes in the area by a proportion of the new home’s price minus the depreciation the older homes had experienced. Threecrow’s parents’ house would now have a notional market value of $9,785 minus $79.17 in depreciation, or a new market price of $9,705.83. (While the particulars of this example will inevitably vary from reality, the principle nevertheless applies.)

On the other hand, should Threecrow’s parents have decided that same year to sell their home, the real estate agent will dutifully put it on the market at its new market price of $9705.83, or $205.83 more than they paid for it, citing the appreciation in the market prices for homes in the area. Of course, the real estate agent has a hidden agenda in all of this – the dearer the price of the home, the greater her commission. And, since this new price is supported by the empirical evidence of homes sale prices in the area, the new buyers – who have looked diligently for an alternative – come to the conclusion that this price is justified by the housing market.

The bank, with whom they sign a mortgage agreement has also appraised the home and compared it to the selling prices of homes in the area. They have also established that the buyers indeed have a contract to deliver their labor power to an employer at a price which makes the service on the debt reasonable. The bank, like the real estate agent, is also not concerned that the buyers have purchased less house for more dollars. They are only concerned that they have increased the flow of debt service from the existing home with little or no efforts on their part. So they agree to finance the new mortgage at the asking price of $9,705.83, despite the fact that the house is a year older, and has that much less of a useful life. In addition to the original $9,500 they injected into the economy for the first purchase of the home, they now create $9,705.83 in the Threecrow’s parents’ account minus the outstanding debt on the original mortgage.

While the home has actually declined in value by $79.17 over the year, it actually sells for $205.83 more than originally paid for it. In value it has depreciated, but value does not determine its selling price. Dollars, which have no value at all, is the material in which the price of the home is denominated, as it is the denomination of the buyers’ wages.

And what of the buyers? They have no way of telling whether they have paid too much or too little for the home since they do not, and cannot know, the value of the home. They only know that when they enter the market for a home in 1952 for some unexplained reason a home costs more than it did in 1951. Each year then, for some unexplained reason, or so many reasons as to constitute an obstacle to any reasoning, home prices march upward irresistibly. Each new buyer of the home assumes greater debt for less house than the mortgagee before him, and must, therefore, earn more to service that debt than the previous.

Socially necessary labor time now takes the form of the labor time required to earn the requisite quantities of dollars to purchase the home. And, since this labor time is always tied to the dollar wages each worker receives in exchange for his labor power, either the quantity of those wage dollars must increase for a given amount of labor power, or the amount of labor powers offered must increase: two jobs replace one – either in the form of a single worker employed in two jobs, or by the addition of the earnings of a spouse.

The illusion of scarcity – the maintenance of a constant threat of starvation for working people amidst actual great material wealth – is the only basis on which actual superfluity of labor power could exist. The actual material wealth of society must appear in a form that is comprehensible to our containers of labor power: hunger, want, and deprivation – in a phrase, as the constant battle for mere physical survival, as a battle of the loaf.

Our rebel redneck or his comrade, the African-American deadbeat sub-prime mortgagee, must be brought to experience scarcity in the only form consistent with real material abundance: as a constant lack of sufficient fiat necessary to purchase this abundant means of life. Even as the actual value of homes shrink and the ease by which they can be built grows, the actual dollar prices of homes (and everything else) must constantly increase to create a phony scarcity – a purely monetary condition of insufficiency – and so goad the worker to remain on the job, constantly expand the amount of labor power he is prepared to sell, and to seek out the highest price for this labor power.